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Free doctors visits for children, concession holders and pensioners are under threat despite a $3.5 billion boost from the Albanese government because of new taxes that state governments want to impose on general practitioners, doctors have warned.

Prime Minister Anthony Albanese, Health Minister Mark Butler and Treasurer Jim Chalmers spruiked the government’s new incentive – which will triple the bonus paid to doctors for bulk billing vulnerable patients – as it came into effect for 11 million people on Wednesday with the support of Australia’s medical lobby.

Doctors say state governments are making things harder for them.Credit: Getty Images

Butler said the measure had been described as a game changer by the Royal Australian College of General Practitioners, which had lobbied for the policy.

But the college’s president, Nicole Higgins, has privately warned Albanese that the $6.1 billion in budget spending on strengthening Medicare – which also includes a new patient enrolment scheme – will fail to provide the promised benefits for patients without a change to state payroll tax, which is being applied to GPs for the first time in several states.

“While your government has taken steps to support general practice sustainability via budget initiatives like tripling the bulk-billing incentive, disappointingly state governments are making things harder,” she wrote in a letter seen by this masthead.

“The recent change to the interpretation of payroll tax poses serious risks to the national health reform agenda and the MyMedicare Scheme, particularly in relation to increasing bulk-billing services.”

She said extra costs incurred by GPs would inevitably be passed on to patients, increasing gap fees and reducing bulk-billing rates.

At the same time, the Australian Medical Association has proposed medical practices lift their fees by 4.57 per cent starting this month. This brings the recommended price for a 20-minute GP consultation to $102, leaving patients to pay a $60.60 gap fee once the $41.40 Medicare rebate is built in.

AMA vice-president Danielle McMullen defended the advice and said the increase was below inflation.

“Like the rest of the community, doctors have been hit by sharp increases in the cost of doing business,” she said.

The interventions by the medical lobby illustrate the challenge facing Health Minister Butler as he tries to turn around declining bulk-billing rates and soaring out-of-pocket costs for patients, while meeting demands of those in the health sector – including disgruntled pharmacists – and state governments dealing with their own budget pressures and stretched emergency departments.

The Victorian and NSW state revenue offices published rulings in August that said independent GPs working in medical centres would be subject to payroll tax for the first time, which doctors said would force them to increase fees by up to $20. While NSW has granted a 12-month amnesty, Victoria has not changed its position.

The AMA’s NSW president, Michael Bonning, said the amnesty would allow time for negotiations with the state government, but that GP practices would act conservatively while awaiting an outcome.

“If clinics are currently bulk billing patients, then I expect they will appreciate the added support. Doctors who bulk bill some of their patients, they may expand it,” he said.

“But for many practices that have already made changes based on practice viability and concerns about payroll tax, it is harder to see them reversing those decisions and bulk billing more patients without certainty. That’s the crux of this: if you don’t know if a tax is going to be levied upon you, often you will take a conservative position to ensure you are not caught with a tax liability that you are unable to pay.”

Butler said making it easier to see a doctor was his government’s highest priority, and he was concerned that changes to payroll tax would mean billions of dollars in Commonwealth investment would end up going to state treasury offices.

“Payroll tax is ultimately a matter for the states to manage, and I urge them to consider the feedback from GPs. It’s encouraging, though, that some states have announced amnesties to support their GPs,” he said.

While he would not put a number on how many clinics he expected to take up the federal government’s new incentive, Butler said GPs around the country had told him they would return to bulk billing under the scheme.

“Many of them had moved away from bulk billing only in the last couple of years, because of that build-up of pressure: the freeze in the Medicare rebate that Peter Dutton started, then COVID, and then obviously the cost- of-living shock that swept the globe over the last 12 or 18 months,” he said.

Coalition health spokeswoman Anne Ruston said the national bulk-billing rate for GPs had continued to fall. There was an 8 percentage point drop in the previous  financial year, from 88.3 per cent to 80.2 per cent of all services, taking it to the lowest point in a decade.

“This concerning trend has continued even following the government’s announcement on tripling the bulk-billing incentive, showing they have failed to restore confidence in the system,” she said.

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